New Registration Regime and Certain Consequences on Issuers

The Canadian Securities Administrators have spent the past several years working on a national registration system for securities dealers and advisers, and portfolio and investment fund managers. This new system, established under Regulation 31 103 and Policy Statement 31 103, is in effect as of September 28, 2009. It applies to new market participants immediately, except exempt market intermediaries who will be able to rely on the exemptions contained in Regulation 45-106 until March 27, 2010. The Regulation includes a transition period for existing participants.

Mandatory registration is no longer triggered by a given transaction, but rather by the activities, whether main or incidental, that a person carries on.

Registrants and their representatives are held to stricter requirements and conditions in terms of proficiency, qualifications, insurance and governance, including, where applicable, the existence of an Ultimate Designated Person and a Chief Compliance Officer.

Issuers should take particular note of the registration requirement that now applies to persons acting as intermediaries on the exempt market, with the compensation payable to the intermediary counting as an indicator that this requirement applies. In practice, issuers should ensure that intermediaries with whom they deal comply with all regulatory requirements as of March 28, 2010, for example in a distribution to accredited investors.

These new rules are highly detailed and often complex. Please do not hesitate to contact us for more details or to review your specific situation